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UpstreamOnline: Gumusut set for delayed first oil

RUSSELL SEARANCKE, Wellington

Shell’s multi-billion dollar Gumusut-Kakap deep-water oil project in Malaysia is facing delays while project partners deal with weight issues on the topsides.

The topsides of the semi-submersible production platform have been designed far too heavy for the supporting hull, according to well-placed sources. Some suggested the deck is 3000 tonnes overweight.

The Gumusut project’s main turnkey contractor is Malaysia Marine&Heavy Engineering (MMHE), which one year ago was awarded its prestigious Gumusut platform contract by way of direct negotiations between Shell, national oil company Petronas, which is a part owner in Gumusut-Kakap, and Petronas subsidiary MISC, which owns MMHE.

French super-contractor Technip is understood to have been awarded the detailed engineeringcontract for the Gumusut topsides.

Malaysian sources were unsure how the error had been made, but said the situation is messy.

They suggested a communication breakdown between MMHE, Technip and the Gumusut co-venturers.

Early conceptual work had probably failed to identify the likely higher weight limit, said sources.

The detailed design of the hull was done in Houston, and work has started on hull fabrication in Malaysia. But the topsides design was done in Malaysia and the weight has mushroomed.

Some sources claimed Shell has been trying to take full control of the project but this has been resisted by Petronas, which wants all main engineering and construction aspects of this pivotal development kept in Malaysia. Petronas has made no secret of its desire to develop its own deep-water capability.

“The objective is to make Malaysia the centre of deep-water technology,” said Petronas chief executive Hassan Marican late last year.

“The local support and services companies must prepare themselves for the long term. They cannot be short-term players.”

“You need to provide the confidence and nurturing for this industry to grow and the future is deep water. What we want to do is replicate what we did 15 to 20 years ago when we developed the capability for operations in the continental shelf (shallow water),” he added.

The platform is the project’s principal production facility, and could carry a value of up to US$500 million.

MMHE’s contract covers construction of a 40,000-tonne-plus floating platform to be located in water depths of about 1000 metres. The offshore builder is no novice. It has already fabricated the 15,000-tonne spar floating platform for the Kikeh oil project, Malaysia’s first deep-water field development. Gumusut is the second.

The Gumusut field sits in Block J where the owners are operator Shell with 40%, ConocoPhillips on 40% and Petronas Carigali with 20%.

The co-venturers had been expected to make a final investment decision on Gumusut imminently, but this will be delayed, said sources.

Likewise, the planned first oil date in 2010 will be affected too.

The partners are in discussions with MMHE and Technip on how to bring the project back into line, said sources.

Shell, Petronas, MMHE and Technip had not answered queries as Upstream went to press.

Shell had been expected to be already drilling development wells at present at Gumusut with the deep-water rig Atwood Falcon, but instead Petronas is using the rig on sub-let to Shell.

Rig owner Atwood Oceanics said the rig would return to Shell this December until about July 2009.

For Gumusut, a large subsea oil export pipeline is also proposed as part of the Sabah Oil&Gas Terminal (SOGT) integrated project that involves a new onshore oil and gas processing terminal in Kimanis, Sabah, with a storage capacity of 300,000 barrels per day of oil, and an onshore gas terminal.

Processed gas will be transported via a 480-kilometre gas pipeline from Kimanis to the Petronas LNG Complex in Bintulu, Sarawak.

The combined Gumusut-Kakap project includes a large section of Murphy Oil’s Kakap field in Block K.

Estimated recoverable oil reserves are in the range of 300 million to 500 million barrels.

The partners in Block K (Kakap) are Murphy with an 80% interest and Petronas, which holds 20%.
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25 October 2007 23:01 GMT  | last updated: 26 October 2007 04:05 GMT

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